2012 (7) TMI 1097 - SC - Indian Laws

Grant of lease of iron-ore mines to the public sector undertakings - legality of the decision of the State Government seeking to withdraw its recommendations for mining leases, and the subsequent decision of the Central Government to reject those very recommendations - Whether the Notifications dated December 21, 1962 (1962 Notification) and February 28, 1969 (1969 Notification) issued by the State of Bihar and the Notification dated October 27, 2006 (2006 Notification) issued by the State of Jharkhand are legal and valid? - Memorandum of understanding (MOU) was arrived at between the Government of Jharkhand and Monnet, for the establishment of an integrated steel plant - Jharkhand Government vide its letter dated 6.8.2004 recommended the proposal of Monnet to Union of India Under Section 5 (1) and 11 (5) of the Mines and Minerals (Development and Regulation) Act, 1957 ( MMDR Act ) - 58 applications were received, seeking grant of the mining leases over an area of 3566.54 hectares in Ghatkhuri reserved forest - letter also stated that priority was being given to Monnet in terms of Section 11 (3) of the Act on the basis of its technical mineral based industry and financial capacity - Government of India, summarily rejected the same. ORDER - R.M. Lodha - HELD THAT - We may record that the Government of Jharkhand had issued one more notification subsequently, dated 27.10.2006, by which it was decided that the areas described in the 1962 and 1969 notifications will not be given to anyone, except to the public sector undertakings or joint venture projects of the State. No fundamental right in mining - The Appellants have applied for mining leases in a land belonging to Government of Jharkhand (erstwhile Bihar) and it is for iron-ore which is a mineral included in the First Schedule to the 1957 Act in respect of which no mining lease can be granted without the prior approval of the Central Government. It goes without saying that no person can claim any right in any land belonging to Government or in any mines in any land belonging to Government except under 1957 Act and 1960 Rules. No person has any fundamental right to claim that he should be granted mining lease or prospecting licence or permitted reconnaissance operation in any land belonging to the Government. It is apt to quote the following statement of O. Chinnappa Reddy, J. in M/s. Hind Stone 1981 (2) TMI 239 - SUPREME COURT . State Government's ownership in mines and minerals within its territory and the power of reservation - The admitted position is that the State Government (erstwhile Bihar and now Jharkhand) is the owner of the subject area. Mines and minerals within its territory vest in it absolutely. As a matter of fact it is because of this position that the Appellants made their application for grant of mining lease to the State Government. The State Government had full power to recall the recommendation made to the Central Government for some good reason. Once 1962 and 1969 Notifications issued by the erstwhile State of Bihar and 2006 Notification issued by the State of Jharkhand have been found by me to be valid and legal, the submissions of Mr. Ranjit Kumar pale in insignificance and are not enough to invalidate the action of the State Government in recalling the recommendation made in favour of Monnet. The valid reservation of subject mining area for exploitation in public sector disentitles Monnet -as well as other Appellants -to any relief. It is well settled that no one has legal or vested right to the grant or renewal of a mining lease. Monnet cannot claim a legal or vested right for grant of the mining lease. It is true that by the MOU entered into between the State Government and Monnet certain commitments were made by the State Government but firstly, such MOU is not a contract as contemplated under Article 299(1) of the Constitution of India and secondly, in grant of mining lease of a property of the State, the State Government has a discretion to grant or refuse to grant any mining lease. Obviously, the State Government is required to exercise its discretion, subject to the requirement of law. In view of the fact that area is reserved for exploitation of mineral in public sector, it cannot be said that the discretion exercised by the State Government suffers from any legal flaw. The recommendation in favour of Monnet to the Central Government was simply a proposal with certain pre-conditions. For withdrawal of such proposal by the State Government, in my view, no notice was legally required to be given. Moreover, no prejudice has been caused to it by not giving any notice before recalling the recommendation as it had no legal or vested right to the grant of mining lease. The area is not available for grant of mining lease in the private sector. For all these reasons, I do not find that the case of Monnet stands differently from the other Appellants. Therefore, there is no merit in these appeals and they are dismissed. H.L. Gokhale, J. - HELD THAT - In M.A. Tulloch and Company 1963 (8) TMI 42 - SUPREME COURT , the Constitution Bench was concerned with legality of certain demands of fee under the Orissa Mining Areas Development Fund Act, 1952, and the same question arose as to whether the provisions of the Orissa Act were hit by the MMDR Act, 1957 in view of Entry No. 54 of the Union List. The validity of the state act was canvassed under Entry No. 23 of the State List and was accepted as not hit by the provisions of the MMDR Act, 1957. The Court held the Orissa Act and the demand of fee to be valid. In Baijnath Kadio 1969 (8) TMI 82 - SUPREME COURT , this Court was concerned with the validity of second proviso of Section 10 of the Bihar Land Reforms Act, 1964 for being in conflict with the provisions concerning miner minerals under the MMDR Act, 1957. The Court followed the propositions in Hingir-Rampur Coal Company 1960 (11) TMI 115 - SUPREME COURT and M.A. Tulloch Company and found that the field was not open to the State Legislature, since it was covered under the Central Act. As can be seen from these three judgments, if there is a declaration by the Parliament, to the extent of that declaration, the Regulation of mines and minerals development will be outside the scope of the State Legislation as provided under Entry No. 54 of the Centre List. Presently, we are not concerned with the conflict of any of the provisions under the MMDR Act, either with any State Legislation or with any Executive Order under a State Legislation issued by the State Government. The submission of the Appellant is that the Jharkhand Government was not competent at all to issue the notifications of 1962 and 1969 reserving the mine areas for public undertaking. The answer of the State Government is that it is acting under the very MMDR Act, and the notifications are within the four corners of its powers as permitted by the Central Legislation. All these issues raised by the Appellants have already been decided by a bench of three Judges of this Court in Amritlal Nathubhai Shah v. Union of India 1976 (8) TMI 175 - SUPREME COURT . In that matter also the Government of Gujarat had issued similar notifications dated 31.12.1963 and 26.2.1964 reserving the lands in certain talukas for exploitation of bauxite in public sector. The applications filed by the Appellant for grant of mining lease for bauxite were rejected by the State Government. The revision application filed by the Appellant to the Central Government was also rejected by its order which stated that the State Government was the owner of the minerals within its territory and the minerals vest in it, and also that the State Government had the inherent right to reserve any particular area for exploitation in the public sector. The Gujarat High Court had accepted this view. In view of the discussion as above, the judgment in Amritlal (supra) cannot be said to be stating anything contrary to the propositions in Hingir-Rampur Coal Company, M.A. Tulloch and Company and Baijnath Kadio (supra), but is a binding precedent. The notifications impugned by the Appellants in the present group of appeals were fully protected under the provisions of MMDR Act, and also as explained in Amritlal (supra). Desueutde - The submissions with respect to the two notifications suffering on account of Desuetude has also no merit, as the law requires that there must be a considerable period of neglect, and it is necessary to show that there is a contrary practice of a considerable time. The Appellants have not been able to show anything to that effect. The authorities of the State of Jharkhand have acted the moment the notifications were brought to their notice, and they have acted in accordance therewith. This certainly cannot amount to deusteude. Promissory Estoppel and Legitimate Expectations - In the instant case it was only a proposal, and it was very much made clear that it was to be approved by the Central Government, prior whereto it could not be construed as containing a promise. Besides, equity cannot be used against a statutory provision or notification. What the Appellants are seeking is in a way some kind of a specific performance when there is no concluded contract between the parties. An MOU is not a contract, and not in any case within the meaning of Article 299 of the Constitution of India. Mines and minerals are a part of the wealth of a nation. Article 39(c) mandates that state should see to it that operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. The public interest is very much writ large in the provisions of MMDR Act and in the declaration Under Section 2 thereof. The ownership of the mines vests in the State of Jharkhand in view of the declaration under the provisions of Bihar Land Reforms Act, 1950 which act is protected by placing it in the Ninth Schedule added by the First Amendment to the Constitution. What is being submitted by the Appellants is that the State Government cannot issue such notifications for the reasons which the Appellants have canvassed. We, however, do not find any error in the letter of withdrawal dated 13.9.2005 issued by the State of Jharkhand, and the letter of rejection dated 6.3.2006 issued by the Union of India for the reasons stated therein. In our view, the State of Jharkhand was fully justified in declining the grant of leases to the private sector operators, and in reserving the areas for the public sector undertakings on the basis of notifications of 1962, 1969 and 2006. All that the State Government has done is to act in furtherance of the policy of the statute and it cannot be faulted for the same. Therefore, we do not find any merit in these appeals and they are all dismissed. The interim orders passed therein will stand vacated. Iron is a mineral necessary for industrial development. In view of the pendency of these appeals, and the stay orders sought by the Appellants therein, grant of lease of iron-ore mines to the public sector undertakings could not be made for over six years. The State of Jharkhand and the people at large have thereby suffered. In view thereof we would have been justified in imposing costs on the Appellants. However, considering that important questions of law were raised in these appeals, we refrain from doing the same. The parties will therefore, bear their own costs.

Summary

Issues Involved:
1. Validity of Notifications dated December 21, 1962, February 28, 1969, and October 27, 2006 issued by the State of Bihar and Jharkhand.
2. Authority of the State Government to reserve mining areas for public sector undertakings.
3. Applicability of the doctrines of promissory estoppel and legitimate expectation.
4. Doctrine of desuetude concerning the 1962 and 1969 Notifications.
5. Procedural fairness and violation of natural justice in the withdrawal of mining lease recommendations.

Issue-wise Detailed Analysis:

1. Validity of Notifications dated December 21, 1962, February 28, 1969, and October 27, 2006
The Supreme Court examined whether the Notifications issued by the erstwhile State of Bihar and later by the State of Jharkhand were legal and valid under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Mineral Concession Rules, 1960 (MC Rules).

- 1962 and 1969 Notifications: The Court found that these notifications were validly issued under the authority of the State Government, which had the inherent right to reserve any area for exploitation by public sector undertakings. The notifications were not in conflict with the MMDR Act or the MC Rules as they stood at the time of issuance. The State's ownership of mines and minerals within its territory was not affected by the MMDR Act.

- 2006 Notification: This notification reiterated the reservations made in 1962 and 1969 and was issued under Section 17A(2) of the MMDR Act. The Court held that the State Government had the authority to issue this notification, and it did not require prior approval from the Central Government as it was not a new reservation but a reiteration of existing ones.

2. Authority of the State Government to Reserve Mining Areas for Public Sector Undertakings
The Court held that the State Government had the inherent power to reserve mining areas for public sector undertakings based on its ownership of the mines and minerals within its territory. This power was not taken away by the MMDR Act.

- Ownership and Control: The State's ownership of mines and minerals was affirmed under Section 4(a) of the Bihar Land Reforms Act, 1950, which vested all interests in mines and minerals absolutely in the State.

- Regulatory Framework: The MMDR Act and the MC Rules provided a regulatory framework but did not divest the State Government of its ownership rights or its power to reserve areas for public sector exploitation.

3. Applicability of the Doctrines of Promissory Estoppel and Legitimate Expectation
The Court examined whether the doctrines of promissory estoppel and legitimate expectation could be invoked by the appellants to challenge the withdrawal of mining lease recommendations.

- Promissory Estoppel: The Court held that the doctrine of promissory estoppel could not be invoked against the State to compel it to act contrary to law or public policy. The commitments made in the MOUs were subject to existing laws and the availability of the land, which was reserved for public sector undertakings.

- Legitimate Expectation: The doctrine of legitimate expectation was also not applicable as the State's actions were in accordance with statutory provisions and public interest. The appellants could not claim a vested right to the grant of mining leases based on the MOUs.

4. Doctrine of Desuetude Concerning the 1962 and 1969 Notifications
The doctrine of desuetude, which denotes quasi-repeal due to non-use, was examined in relation to the 1962 and 1969 Notifications.

- Non-Applicability: The Court held that the doctrine of desuetude was not applicable as the notifications had not been in disuse for a sufficiently long period, nor was there a contrary practice established. The notifications continued to be in effect and were reiterated by the 2006 Notification.

5. Procedural Fairness and Violation of Natural Justice in the Withdrawal of Mining Lease Recommendations
The appellants argued that the withdrawal of mining lease recommendations by the State Government violated principles of natural justice as they were not given an opportunity to be heard.

- No Vested Right: The Court held that no one has a vested right to the grant or renewal of a mining lease. The recommendations made by the State Government were proposals subject to approval by the Central Government and did not confer any legal or vested rights on the appellants.

- Withdrawal Justified: The withdrawal of recommendations was justified as the areas were reserved for public sector undertakings. The State Government's actions were neither unfair nor arbitrary.

Conclusion
The Supreme Court dismissed the appeals, upholding the validity of the 1962, 1969, and 2006 Notifications and affirming the State Government's authority to reserve mining areas for public sector undertakings. The doctrines of promissory estoppel and legitimate expectation were found inapplicable, and the doctrine of desuetude did not apply to the notifications in question. The procedural fairness argument was also rejected as the appellants had no vested right to the grant of mining leases.